The pharmaceutical industry will need to make dramatic changes to how they do business in the evolving new healthcare market. From product liability litigation, billions of dollars in legal settlements and fines to restrictions on marketing and sales activities and congressional inquiries about conflict of interest, you would think pharmaceutical companies would also get the hint that it is time to change. They need uncompromised integrity, more expertise, more productive R & D, smaller, more manageable organizations, dramatically reduced operating expenses, better appreciation for market expectations, and a complete overhaul of commercialization strategies and tactics. If pharmaceutical company executives know what needs to be done, why do they opt for modest incremental change or resist change all together?
It took the auto industry the threat of bankruptcy and a government bailout to get them to make the changes they could have done years earlier to avoid their near death experience. What kept them from doing something earlier? Leadership with the courage to change.
After all, change and venturing into new, unexplored territory involves dealing with fear of the unknown. Will the changes work? Historical success is probably irrelevant for the future so how do I forecast? How long will it take to recover? What if it doesn’t work? How will it affect our P & L? Will our investors understand what we are doing and will they continue to invest? Will our employees and suppliers understand our need to change? They will certainly understand they may be negatively affected by the changes.
An even greater fear that today’s corporate officers have to face is the fear of personal loss resulting from initiating these massive, business restructuring changes. The dramatic nature of the changes needed are a break from the traditional business model, are untested, and fraught with uncertainty. I know how to do the old model; I’m not so sure about these changes. Will my career suffer? Will my bonus opportunity be compromised? Am I putting my retirement at risk? If I can keep the current business model going for a few more years, I’ll be out of here with my retirement package.
It often takes bankruptcy, or the threat of bankruptcy in the case of the auto industry, to provide clarity, answers to many of these questions, and to mitigate the personal consequences of making the necessary changes. Without courage (or bankruptcy) corporate leadership will continue to make modest adjustments, incremental restructurings, and token modifications so as not to disrupt the status quo, to keep investors happy, and to protect their personal interests.
The pharmaceutical industry needs leadership with the courage to change.